CHAPTER II

PROFILE OF AGRO BASED

INDUSTRIES
 PROFILE OF AGRO BASED INDUSTRIES

2.1 INTRODUCTION

Agro based industries are the dynamic and essential industries in India

which involves more employment opportunities to the local people.

Tiruchirappalli district is one of the agricultural consists district in Tamil Nadu

with Cauvery delta river basin cultivating paddy, Banana, sugar cane and oil

seeds. Mannachanallur Ponni is one of the famous rice varieties which is

desirable rice consumption not only in Tamil Nadu but also in glob. Growth of

Rice Mills are depends on availability of raw materials and labour,

Tiruchirappalli district fulfill the basic requirement of the agro based industries.

Therefore, the study concentrates to rice mills which are spread available in

and around Tiruchirappalli district. This study confined to only rice mill

industries with respect to production, sales, employment and problems in

Tiruchirappalli district there are 179 rice mills of which 83 modern mills were

chosen as sample based on the stratified random sampling techniques.

Rice milling industry is one of the most energy consuming industries.

Like capital, labour and material, energy is one of the production factors which

used to produce final product. S. K. Goyal (2012) if rice husk used as a fuel, the

reduction in the use of rice husk would enable the rice industry to spare rice

husk. Saving of husk would also lead to co-generation of thermal energy in

furnaces for boilers and dryers in the rice industry. Thus energy conservation in
the rice industry would lead to reduction in the use of fuels and electricity.

Rice mills use the thermal energy of steam generated in boilers, which

are fired by rice husk - by product of paddy processing in the rice mills and

which is globally well-known as very convenient source of dry biomass energy

of reasonable heat value (Sardrul Islam, 2013). Electricity generation from rice

husk depends on the availability of raw material and the technology for

conversion rice husk to energy. This chapter covers agro based industries

&their performance at modern rice mill industries in Tiruchirappalli district.

2.2 OVERVIEW OF AGRO BASED INDUSTRIES

According to Famine Enquiry Commission (1944), Agro-based

industries are those, which are involved in supplying the farm with agricultural

inputs besides handling the products of the farm.

As state by S N Bhattacharya (1980), Agro-based industries are those

industries which have either direct or indirect links with agriculture.

Agriculture and industry are integral components of the development

process due to their mutual relationship as agriculture provides inputs to the

industry and output of the industry is used in agriculture to expand production.

There are many industries which are based on agricultural production. Agro-

based industries are depending on agriculture for their raw-material and other

basic inputs. Stabilization and growth of agricultural production results in rapid

advancement in output and employment in agro-industries. The overall effect

of agricultural growth & growth of agro-industries creates greater opportunities

for industrial growth as well as mixing of the different sectors of the economy.

Agro-based industries may be classified into two categories namely food

processing industries and non-food processing industries. Agro-processing is

now regarded as the sunrise sector of the Indian economy in view of its large

potential for growth and likely socio economic impact specifically on

employment and income generation. Some estimates suggest that in developed

countries, up to 14 percent of the total work force is engaged in agro-

processing sector directly or indirectly. However, in India, only 3 percent of the

work force finds employment in this sector revealing its underdeveloped state

and vast untapped potential for employment. Properly developed, agro-

processing sector can make India a major player at the global level for

marketing and supply of processed food, feed and a wide range of other plant

and animal products.

According to the International Standard Industrial Classification (ISIC),

agro-based industries are classified into 14 major categories which consist of

food and beverages, tobacco products, paper and wood products, textiles,

footwear and apparel, leather products and rubber products.

 Table No: 2.1
Classification of Agro Based Industries
S. Category (Based on Raw
Finished Products
No Material)
a) Wheat Flour
b) Confectionary, Bakery item and
Biscuit Manufacturing
1 Cereals Based Industry d) Rice (puffed and flaked)
e) Rice Bran and Rice Bran Oil
f) Corn flakes and Canned Baby Corn
h) Starch Material
a) Gram Flour (Basen)
b) Namkeens (ready to eat snacks)
2 Pulses Based Industry
c) Papad
d) Whole or Split Dal
a) Edible Oil
3 Oilseed Based Industry b) Animal Feed
c) Processed Seed (Sesame)
a) Frozen fruits & Vegetables
b) Chips & Wafers (Ready to Eat snacks)
Fruits & Vegetables Based c) French Fries (Ready to Eat snacks)
4
Industry d) Dehydrated Vegetables
e) Ketchups, Purees & Concentrates
f) Juices and Pickles
a) Pastes & Powders
5 Spices Based Industry b) Oleoresins
c) Aromatic Extractions
6 Dairy Based Industry a) Skimmed Milk Powder, Ghee, Curd,etc
7 Floriculture Based Industry a) Fresh & Dried Flowers
a) Fish Processing
8 Fisheries Industry
b) Fish meal and Prawn Pickle
a) Processed Poultry Products
9 Livestock & Poultry b) Meat Gravy Concentrates
c) Mutton & Lamb Processing
Medicinal Herbs Based
10 a) Medicinal Products
Industry
Cotton & Jute Based
11 b) Fibres processing
Industry
a) Jaggery
12 Sugarcane Based Industry
b) Confectionary & Bakery Products
Plantation Crops based
13 a) Tea Powder and Coffee Powder
Industry
14 Others a) Honey and Mushroom
 Food processing sector is in growing phase. It needs to tap the market by

developing suitable marketing strategies which should be capable of

succeeding over the competition with regard to existing products as well as

new products. The food processing entrepreneurs are not only the sellers or

retailers but often the manufacturers of the products. They are responsible for

product development and manufacturing (Satya, 2015).

In India, economic development has long been oriented by the

government since its independence, given the support of what is believed to be

a “thoroughly parliamentary democracy.” This policy line has resulted,

however, in the adoption of more populist policies geared to social security that

gives special attention to the demand of lower income class, while the private

economic sectors had been broadly controlled (Akira, 2013). While the change

of the value added Gross Domestic Product (GDP) components toward a post-

agro-based structure has been seen just as it was seen in many other emerging

and developing countries, the economy still remains in the early phase of

development with agriculture taking a bigger proportion.

Agro based industries various kinds of products produced followed by

raw materials; jute is one such cash crop which can be utilized for making

various diversified jute made products. In Assam, at present day context, the

most emergence issue is to create job oriented economy or sector both in rural

as well as urban areas. Secondary sector remains the most probable areas where

lot of employment generation are there (Manashree, 2015).Primary sector has

already congested and in rural areas there are limited scope to expand.
 Agriculture has changed substantially from a subsistence activity to

become a huge technology and market driven business. The agribusiness sector

which serves production agriculture has shown huge growth in India in the

recent decades. Its development in countries such as India is driven primarily

by major changes, shifts and constraints that occur as economic development

proceeds in the country and the world. These include growing scarcity of land,

the need to improve productivities, commercialisation of agriculture, change in

scale and reorganisation of production and marketing, economic liberalisation

and reducing government involvement in agriculture, changing food

consumption patterns, development of the rural economy, infrastructure, rural-

urban migration, and the communication and information technology

revolution (Vasant, 2014).

Farmers and small and medium agro-enterprises can benefit from

participation in agro based clusters as a well-developed concentration of related

agribusiness spurs increased productivity through specialized inputs, access to

information, synergies, and access to public goods and more rapid innovation

through cooperative research (Sunil, 2014). Moreover agro-based cluster

growth seems to have positive spill-over effects on local and rural

development. However agro-based clusters need to be induced through public

and private entities due to lack of managerial competence among stakeholders.

The non-institutional agencies are still playing an important role in the

growth of agro-based Industries. Finance from institutional sources is available

but it does not flow evenly to different industrial units and its quantum is
insufficient to meet the requirements. Finance from non-institutional sources is

easily available, but its terms and conditions are generally hard and they are

charging exorbitant rates of interest. Therefore agro-based industries do not

find it smooth sailing to meet their capital requirement (Lakshmi, 2014).

Agriculture employs a majority of the rural population. It draws majorly

from documentary evidence on agribusiness and agro-industrial linkage and

reveals that, the farm, off farm and processing components of agribusiness are

capable of generating jobs, provision of income, poverty reduction and

infrastructural growth. Agricultural sector is the highest employer of the rural

labour force(Pawa, 2014). Improving the commercial value of agriculture

would certainly culminate into a serious agrarian change that would impact on

the greater number of people and the rural sector.

Potential positive direct socio-economic effects of large-scale

agricultural investments, in order to conclude about the overall impact of such

investments, indirect socio-economic effects within the household,

communities and markets as well as environmental implications have to be

accounted for in any strategy focusing on developing sustainable and inclusive

investments. These factors contribute to the understanding of the welfare

implications of different institutional arrangements for large-scale agro-

industrial investments, including for bio fuels and others (Raoul, 2015).

Agro-based units rely upon consumer consumption. The people of

Varanasi are taken as sample and their pattern is analyzed. Agro based
consumers here refer to the consumers who consume agro-processed good such

as confectionaries, flour, and other such goods. Agro-based units refer to the

units engaged in processing the agro based output for the consumers and

produces agro-processed goods in the present study; the main objective was to

analyze the impact of marketing practices followed by agro-based units on the

consumer consumption. This was further divided into certain segments such as

practices followed by the industrial units, consumption pattern of consumers,

reason for consumption and remedial measures (Sannamelam Murali, 2018).

Marketing of agriculture can be made successful only the farmers should

have adequate and cheap transport facilities which could enable him to take his

surplus produce to the mandi rather than dispose it of in the village itself to the

village money-lender-cum-merchant at low prices and also the farmers should

have clear information regarding the market conditions as well as about the

ruling prices, otherwise may be cheated. The government should take some

policy measures to reduce the middleman intervention in the market and also to

take some initiatives to upgrade the setup of the market (Saravanan, 2013).

Agriculture and Industry both are considered as two basic pillars of a

developing economy like India. Without development of agriculture, no

country can exist and without industrialization no country can develop. Both

agriculture and industry play vital role in the balanced economic development

of an economy. The share of agriculture and industry is 14.6 percent and 28.6

percent respectively to India’s GDP, but their importance in the country’s

economic, social, and political structure goes well beyond this indicator. Both
the sector hold the key of overall development of the economy by creating

employment, generating income, ensuring self-reliance in food production and

food security, providing tools and equipment to other sectors and foreign

exchange earnings(Sethi, 2012).

Agro-based industries were significant on the income levels of all

categories of the rural population. Increase in incomes was more spectacular in

the households of agricultural workers employed in agro-based industrial units.

While the farmer category was benefited by the agro-based industries indirectly

through higher rates of wages and ensured employment in the farm sector, the

latter was benefited by the employment in agro-based industrial units. Agro

based industries in India is one of the basic and backbone of Indian economy

which provide employment, income generation, industrial inputs and outputs,

regional growth and associated human beings(Paramasivan, 2016).

Agribusiness boom is underway in India, and it needs big talent to drive

its growth. Growth in agricultural productivity will build incomes and assets,

and although somewhat cyclical, at the macro level, agriculture in India will

inherently be recession proof over the long term. The greatest achievement for

India will come from sustained self-sufficiency in food (Vikram, 2012). Huge

opportunities in Agribusiness are attracting investments in primary production

as well as on the output side in food processing and distribution.

Agro industries have been given significant priority in economic

development in India. The agro industrial sector in India contributes a large

share of overall employment in industry as well as value addition and income

generation. Its continued role in promoting development, and reducing poverty,

will depend on its capacity to contribute to small farm income and rural

employment, particularly among the landless poor. Managerially, one of the

major challenges lies in organizing sustained production and procurement from

large numbers of small farmers (Gandhi, 2001).

Technology can make a considerable contribution to develop agro -

based industries as far as possible .In this point of view, a deeper investigation

was made to identify weather they have been provided more technological

facilities as they expected .In this review to some extent it was noted that they

are having lack of expected technological facilities as well as technological

knowhow. The agro-based industries can be established and developed very

well in NCP to cater the industrial purposes of the country (Randeni, 2011).

Agro-based industries play a vital role in the development of Indian

rural economy. India's 70 percent of total population directly depends on

agriculture and agro-based industries. Sugar industry also one of the most

important agro-based industries in the development process of rural India. The

developments of agro-based industries are crucial importance in the economic

planning and progress of the country (Takale, 2013).

India is one of the largest producers of food and it is also the largest

producer of milk, sugar cane, and tea. It is the second largest producer of rice,

fruits, wheat and vegetables. In India about 70 per cent of the population
depends on agriculture and agro based industries. The development of agro-

processing industries implies the development of agriculture on one hand and

the entire set of industries that cater to the demands of the masses with

improving incomes and environment on the other (Prabeena Ambidattu, 2015).

It creates space for refining farm-industry relations with great export potential.

Agro processing sector has experienced expansion from starting with a

handful of facilities which were mainly operating at domestic/cottage level.

The strategies and its developments for this specific sector, the major problems

faced on this sector developments and the export trends of agro sector. It is at

about 16% due to rapid growth in other sectors as well (Prakash, 2015).

Processed fruit and vegetable products have considerable export potentials and

if it is properly utilized, growers, processors, traders as well as national

economy will benefit.

Agro industries; the volume of business and labour are all dominant

factors positive effect on profits of agribusiness. This has implications for the

development to increase agro-industry as a result of the magnitude of the public

interest to enter into the employment sector because profits can be maximized

simply by increasing the volume of business and number of labour alone. If this

can be run and managed properly organized then the problem of unemployment

rapid and widespread will be resolved soon. However, it is still necessary to

check the level of performance and important from the role of government as to

identify the strengths-weaknesses of the agro-industry (Ambo, 2014).

 Agro food processing sector covers a wide spectrum of products and it is

one of the largest productions, consumption, export and growth prospects. The

vast potential of agricultural resources available in Punjab can be better

exploited and utilized by preserving and processing, using available

technologies. Though, the government of India has sanctioned a number of

schemes. At present, the agro processing industries are using basic and low-

grade technology. There is little high-tech agro/food industry adding value to

primary products (Kashish, 2015).

Food processing sector has a potential to change the socio-economic

conditions of rural India. A Strong and dynamic food processing sector can

play a significant role in diversification of agricultural activities, improving

value-addition opportunities and creating surplus for export of agro-food

products. This requires policies and plans for improvement of food processing

infrastructure including up gradation of technology and enforcement of quality

standards, promoting investment in food processing, thus assisting in domestic

market and export growth (Singh, 2014).

There is need for the banks to increase the amount of loan disbursed to

agro-based Small and medium Enterprises in other to improve and increase

their production. The banks should also prioritize such variables like turnover,

experience, and repayment rate in designing criteria for selecting agro based

loan beneficiaries and as well increase their lending to female agro-based Small

and medium enterprises to encourage more women to establish agro-based

Small and medium enterprises. The bulk of the sampled small and medium
scale agro-based enterprises accessed very small loans when viewed against the

high cost of doing business (Ezeaku, 2014).

Agro industry, resulting in low value-added in agricultural

transformation has been one of the main causes for stagnation in rural GDP and

rural incomes, in some countries. Conversely, a substantial agro-food industry

transformation sub-sector, generating high value addition to the outflow of

goods, correlates with higher levels of agricultural Gross Domestic Product

(GDP) and rural incomes in other countries. Besides that there is planned

investment and socio-economic development will open up many breaks, and

provide the basis for rapid progress to the agro based industries (Hicks, 2001).

Agro based industries play an important role in strengthening industrial

and agricultural linkages. Agro based industries are these processing industries

which use large quantities of agricultural raw materials such as rice milling.

Wheat flour processing, textile, sugar, paper, rubber production etc. (Baby,

2014). The government motto should be to convert the low value high volume

product providing job security to the employees, benefiting the economy stage.

Apart from large quantity of food grain, fruits and vegetables are

available for processing in Punjab. The state government announced its new

industrial policy in 2009 which focuses on creating favourable destination for

investment and to establish synergy between agriculture and industrial sectors

and to rejuvenate small scale sector Special package of incentives and

concession are provided for agro-based industries (Dhami, 2013).

 Agro based industries are those processing industries which use large

quantities of agricultural raw materials such as rice milling, wheat flour

processing, textiles, sugar, tea, jute, coffee, paper, coir and rubber production

etc. sugar industry also one of the agro based industry, it helped in

development of rural area and providing employment opportunities, Sugar

cooperatives realised the importance of education so, that it create schools,

colleges, health centres, co-operative credit societies, super bazaars etc. It helps

to poverty and below poverty people (Sharma, 2014).

Agro based industry has been playing a significant role in the rural

economy of India. The industry, being highly labour intensive is a vital source

for local employment. Over the past few decades this industry has seen some

rapid and tremendous growth, though unregulated. This unregulated growth has

threatened the survival of the industry. One of the major constraints of the

industry is the perennial shortage of supplies of raw nuts and the precarious

dependence on supplies from other countries (Shaik, 2015).

India’s agricultural based is quite strong but wastage is very high and

processing of food products is very low. The country‘s agro-based food

processing sector is small and processing of food to consumable standards in

India has reached only 10% recently. India’s share in exports of processed food

in world trade has remained at about 1.5 percent or $3.2 billion. One of the

biggest constraints is that this industry is capital intensive. It creates a strong

entry barrier and allows limited number of players to enter the market. Players

mean competition which reduces efforts to improve quality standards. These

challenges must be addressed to achieve full potential of the Indian food

processing industry (Sasikumar, 2014).

Agro-based industries in rural areas of India create more employment

opportunities in rural areas as well as it is helpful to get good price to farmers

for their agriculture produce, which reduce the farmers suicide and improves

agriculture Gross Domestic Product (GDP). There are great potential for food

processing industries in India. The proper training should be given to the

farmers to establish the processing unit in the village and as per the need easy

process of licensing and finance should be established. Now the word is

moving towards branded product, so small scale entrepreneur should focus to

build their brand in the minds of target customers (Malkar, 2014).

There are many promising dynamics which support the potential for

growth of agro based industry, there are still some significant constraint which,

if not addressed sooner, can impede the growth prospects of the food

Processing Industry in India. Major challenges faced by the Indian food

processing industry include: educating consumers that processed foods can be

more nutritious; dealing with low price elasticity for processed food product;

need for distribution network; development of marketing channels; reshuffling

of food laws; improve food quality standards and strengthening food testing

network; strengthening institutional frame work to develop manpower for

improving research and development capabilities to address global challenges

(Surendra, 2010).
 Commodity finance in case of agricultural commodities is a short term

finance provided by banks to the farmers backed by the warehouse receipt

which the bank uses as collateral. The loan is self-liquidating in nature. The

study reveals that the facility of commodity finance is better than the traditional

financing facilities and farmers and agri-firms who are availing this facility are

overall satisfied with it as they get 75 percent value of the commodity as

finance. This has brought them out of the vicious cycle of local money lenders.

Farmers need not resort to distress sale of their produce. But the interest

presently charged (12-13%) on the finance should be reduced to make it more

beneficial for the farmers. Sometimes the problem of warehouse is faced by the

farmers and agri-firms. The warehousing policy of the government needs to

read just with the changed requirements of farmers (Babita, 2012).

Food processing is defined as a set of techno-economic activities,

applied to all the products, originating from agricultural farm, aqua cultural

sources, livestock and forests for their conservation, handling and value

addition to make them usable as food, feed, fibre, fuel or industrial raw

materials. In food processing various steps included such as backing, drying,

fermentation, malting and other packaging techniques but it should be

reasonable. So that the economic cost will not much increase in the respective

area (Bavana Soni, 2013).

 Table No: 2.2
Growth of Major Agro Based Industries in India
(Values in Numbers)
Industry Group 2010-11 2011-12 2012-13 2013-14 2014-15
Manufacturing of Food Products
35838 36881 37175 37449 38607
& Beverages
Manufacturing of Tobacco
3493 3446 3417 3294 3315
Products
Textiles 18584 18790 18468 18645 18744
Manufacturing of Wearing
9226 9168 9275 9525 9856
Apparel and Fur Industries
Manufacturing of leather
4072 4049 4055 4225 4341
products
Manufacturing of Wood &
4126 4265 4276 4269 4392
Wood Products
Manufacturing of Paper & Paper
6120 6442 6488 6810 6765
Products
Rubber and rubber products 11852 12414 12677 13147 13548
Total 93311 95455 95831 97364 99568
Source: Annual Survey of Industries

The table number 2.2 explains there are 35838 food based industries in

2010-11 which increased to 38607 in 2014-15, Textile industries followed the

second rank after the food based industrial in 2010-11 with 18584 units which

is increased to 18744 units in the year at 2014-15. In the year 2014-15, total

agro based industries amounted to 99568 of which 38607 are Manufacturing of

Food Products & Beverage industries, 3315 Manufacturing of Tobacco

industries, 18744 Textile industries, 9856 Manufacturing of Wearing Apparel

Dredging and Dyeing of Fur industries, 4341 Manufacturing of leather product

industries, 4392 Manufacturing of Wood & Wood Product industries, 6765

Manufacturing of Paper & Paper Product industries and 13548 Rubber and

rubber product industries. On the whole 99568 major agro based industries are

in operation in the year 2014-15 which was higher than the previous year

amounted to 97634 units in the at 2013-14.

 Table No: 2.3
Fixed capital of Agro Based Industries in India 2010-2015
(Values in Rupees)

Industry Group 2010-11 2011-12 2012-13 2013-14 2014-15

Manufacturing
of Food Products 12070511 14503824 15886484 16840071 19199358
& Beverages
Manufacturing
of Tobacco 260784 365009 544815 555038 634536
Products
Textiles 10856909 11787582 11879089 19947723 12957039
Manufacturing
of Wearing
1720781 1677258 2412136 1932488 3376731
Apparel and Fur
Industries
Manufacturing
of leather 628586 714163 727769 863124 847634
products
Manufacturing
of Wood & 449538 489785 469709 482810 544602
Wood Products
Manufacturing
of Paper & Paper 3535209 3760604 4274745 4672330 4885772
Products
Rubber and
4708343 6017345 6079380 7165775 7585668
rubber products
Total 34230661 39315570 42274127 52459359 50031340
Source: Annual Survey of Industries

The table number 2.3 described the fixed capital of food and beverage

industry was Rs. 12070511 in the year of 2010-11, which is increased Rs.

19199358 in the year 2014-15, textile industry has the second place in the fixed

capital of Rs. 10856909 in 2010-11, which is increased as Rs. 12957039 in the

year 2014-15.

On the whole Rs. 50031340 is the fixed capital of major agro based

industries in the year 2014-15, which is less than the previous year amount of

Rs. 52459359 in the year of 2013-14.

 Table No: 2.4
Working capital of Agro Based Industries in India 2010-2015
(Values in Rupees)
Industry
2010-11 2011-12 2012-13 2013-14 2014-15
Group
Manufacturing
of Food
19464541 20281473 23189586 25861107 27211359
Products &
Beverages
Manufacturing
of Tobacco 673406 947907 1267666 1310788 1323422
Products
Textiles 13437886 15194986 15275089 24860635 16399255
Manufacturing
of Wearing
3120415 3111953 3826693 3538737 3376731
Apparel and
Fur Industries
Manufacturing
of leather 972999 1216341 1078839 1349570 2408878
products
Manufacturing
of Wood & 746142 818017 759894 891952 907710
Wood Products
Manufacturing 4503840 4223313 4832873 5415903 6092409
of Paper &
Paper Products
Rubber and 6493434 8263939 9054984 10079179 11887416
rubber products
Total 49412663 54057929 59285624 73307871 69607180
Source: Annual Survey of Industries

The table number 2.4 explain the working capital of food and beverage

industries was Rs. 19454641 in the year 2010-11, which is increased Rs.

27211359 in the year 2014-15; textile industry has the second place in the

working capital of Rs. 13437886, which is increased Rs. 16399255 in the year

2014-15.

On the whole Rs. 69607180 is working capital of major agro based

industries in the year 2014-15, which is lower than the previous year 2013-14

of Rs. 73307871.
 Table No: 2.5
Major Agricultural Export Commodities from India (2015-17)
(Quantity in Million Tone, Values in Rupees)

2015-16 2016-17
Product
Quantity Value Quantity Value
(MT) (US$) (MT) (US$)
Buffalo Meat 1314161.00 4068.66 1330013.00 3924.63
Basmati Rice 4044833.00 3477.35 3999722.00 3222.35
Non-Basmati Rice 6374364.00 2307.81 6813622.00 2553.87
Fresh Vegetables 1872021.00 727.80 3631973.00 852.22
Groundnut 536929.00 614.94 725266.00 811.11
Fresh Fruits 573204.00 594.27 798755.00 741.97
Cereal Preparation 313430.00 506.10 341770.00 532.60
Guargum meals 365097.00 553.09 423283.00 467.10
Other Cereals 908611.00 243.98 738178.00 212.06
Oil meals 2014679.00 535.58 3647307.00 799.44
Pulses 255602.00 252.02 137177.00 191.63
Cocoa Products 32210.11 192.21 25634.91 162.66
Cotton Incl. Waste 1000088.00 1627.14 170274.00 298.54
Sheep/Goat Meat 21952.00 128.38 22715.00 130.59
Spices 820658.97 2502.52 1007877.54 2890.58
Milled Products 415015.65 164.89 251886.54 119.92
Fruits/Vegetable
10684.30 74.18 11679.63 78.91
Seeds
Wheat 614096.00 150.59 262462.00 66.32
Animal Casings 206.36 2.61 173.24 2.06
Processed Meat 282.00 0.96 141.00 0.69
Total 21488124 18725.08 24339910 18059.25
Source: DGCI&S
 The table number 2.5 describes India’s export of agricultural principal

commodities to various countries. In the year 2015-16, export of agro based

industries quantity amounted 21488124 million tonnes with the value of

18725.08 US$, of which non-basmati rice (6374364 MT) followed by basmati

rice (4044833 MT), Oil meals (2014679 MT) were the major agro based

products exported from India.

The table 2.5 indicates that the India’s export of agricultural principal

commodities to various countries. In the year 2016-17, export of agro based

industries quantity amounted 24339910 million tonnes with the value of

18059.25 US$, of which non-basmati rice (6813622 MT) followed by basmati

rice (3999722 MT), Oil meals (3647307 MT) were the major agro based

products exported from India.

2.3 FOREIGN DIRECT INVESTMENT

Foreign Direct Investment is one of the major components of the agro

based industries which is mainly concern with production and processing of

food and food related products with the help of agro based industries. Indian

food processing industry has seen significant growth and changes over the past

few years, driven by changing trends in markets, consumer segments and

regulations. It will shape the demand for value added products and thus for

food processing industry in India (Mohammad, 2013). The Government of

India’s focus towards food processing industry as a priority sector is expected

to ensure policies to support investment in this sector and attract more foreign

direct investment.
 Table No: 2.6

Foreign Direct Investment in Food Processing Sector during 2011 –2016

Year FDI (US$ Million)

2011-12 170.21
2012-13 401.46
2013-14 3982.88
2014-15 515.86
2015-16 505.88
Source: Department of Industrial Policy& Promotion

Chart No: 2.1

FDI in Food Processing Sector
4500
3982.88
4000

3500

3000

2500

2000

1500

1000
401.46 515.86 505.88
500 170.21
0
2011-12 2012-13 2013-14 2014-15 2015-16

The table number 2.6 shows in the year of 2013-2014, the foreign direct

investment was amounted to US$ 3982.88 million which was the highest

foreign direct investment during the last five years. In the year 2014-2015, the

value of foreign direct investment was amounted to US$ 515.86 million and it

has gradually reduced to US$ 505.88 million in the year 2015-2016.

 Table No: 2.7

State-wise Number of Units in Food Processing Sector

No. of
Name of the State/UTs Percentage
Reg. Units
Andhra Pradesh 5,739 15.33%
Andaman & Nicobar Islands 5 0.01%
Assam 1,294 3.46%
Bihar 794 2.12%
Chandigarh (U.T.) 19 0.05%
Chhattisgarh 1,049 2.80%
Dadra & Nagar Haveli 3 0.01%
Daman & Diu 31 0.08%
Delhi 166 0.44%
Goa 86 0.23%
Gujarat 1,904 5.08%
Haryana 631 1.69%
Himachal Pradesh 172 0.46%
Jammu & Kashmir 144 0.38%
Jharkhand 198 0.53%
Karnataka 2,033 5.43%
Kerala 1,460 3.90%
Madhya Pradesh 672 1.79%
Maharashtra 3,040 8.12%
Manipur 21 0.06%
Meghalaya 18 0.05%
Nagaland 15 0.04%
Odisha 932 2.49%
Pudducherry 69 0.18%
Punjab 2,786 7.44%
Rajasthan 862 2.30%
Sikkim 21 0.06%
Tamil Nadu 5,204 13.90%
Telangana 3,850 10.28%
Tripura 71 0.19%
Uttar Pradesh 2,037 5.44%
Uttarakhand 380 1.01%
West Bengal 1,739 4.64%
Total 37,445 100%
Source: MOFPI-Government of India, 2016-17
 The table number 2.7 revealed majority of the (15.33%) food processing

sector of 5739 units in Andhra Pradesh, followed by the Tamil Nadu has

(13.90%) food processing sector of 5204 units, Telangana has third place

(10.28%) with 3850 units, Maharashtra has the next place (8.12%) with 3040

units, Punjab has fifth rank (7.44%) with 2786 units, Uttar Pradesh followed

the next place (5.44%) with 2037 units, Karnataka has the seventh place

(5.43%) with 2033 food processing units, Gujarat followed by the eight rank

(5.08%) with 1904 food processing units, west Bengal has the next place

(4.64%) with 1739 food processing units, Kerala has the tenth rank (3.90) with

1460 food processing units, Assam followed by the next place (3.46%) with

1294 units, Chandigarh has the twelfth place (2.80%) with 1049 units, Odisha

followed the next rank (2.49%) with 932 food processing units, Rajasthan has

fourteenth place (2.30%) with 862 units, Madhya Pradesh has the sixteenth

rank (1.79%) with 672 units, Haryana has the seventeenth place (1.69%) with

631 food processing units, Uttarakhand has the nineteenth place (1.01%) with

380 food processing units. The remaining states are having less than (1% to

0.01%) 200 units to single digit number of 3 units. the state of Dadra of Nagar

Haveli having least number of 3 food processing units only.

Food processing companies has been sub-optimal because of high cost,

low level of productivity, high wastage and lack of competitiveness of Indian

food products in the global market. India is the second largest producer of food

in the world. Whether it is canned food, processed food, food grains, dairy

products, frozen food, fish, meat, poultry, the Indian agro industry has a huge

latent, sea fishing, aqua culture, milk and milk products, meat and poultry are

some of the agro sectors that marked growth over the years (Vandana, 2014).
 Table No: 2.8

Contribution of Food Processing Industries to Gross Domestic Products

(Rupees in Crores)
S. No Economic Activity 2012-13 2013-14 2014-15
1 GDP-All India 85,99,224 91,69,787 98,27,089
2 GDP-Manufacturing 15,74,471 16,58,176 17,76,469
3 GDP-Agriculture, Forestry and 15,23,470 15,79,290 15,82,851
Fishing
4 GDP-FPI 1,43,364 1,49,555 1,60,224
(%) Growth
S. No Economic Activity 2012-13 2013-14 2014-15
5 GDP-All India 4.93 6.64 7.17
6 GDP-Manufacturing 6.23 5.32 7.13
7 GDP-Agriculture, Forestry and 1.19 3.66 0.23
Fishing
8 GDP-FPI -4.66 4.32 7.13
(%) Share of FPI
S. No Economic Activity 2012-13 2013-14 2014-15
9 GDP-All India 1.67 1.63 1.63
10 GDP-Manufacturing 9.11 9.02 9.02
11 GDP-Agriculture, Forestry and 9.41 9.47 10.12
Fishing
Source: Directorate of Economics and Statistics 2015-16

The table number 2.8 explains contribution of food processing industries

to GDP amounted to Rs.1,43,364 crore in 2012-13 which has been increased to

Rs.1,60,224 crore in 2014-15, but the growth rate has raise from 4.66 (2012-

13) to 7.13 percent (2014-15) share of food processing industries to GDP in

2014-15 recorded at 10.12 percent.

In the year 2012-13, Gross Domestic Product (GDP) all India amounted

to Rs.85,99,224 crore as against the Gross Domestic Product (GDP) of Food

Processing Sector (FPI) with Rs.1,43, 364 crore. But, in the year 2014-15

Rs.98,27,089 crore as against the Gross Domestic Product (GDP) of Food

Processing Sector (FPI) Rs.1,60,224 crore. In the 2012-13, growth rate of

Gross Domestic Product (GDP) all India level was 4.93 percent as against -4.46

percent of Gross Domestic Product (GDP) Food Processing Sector (FPI), But

in the year 2014-2015 growth rate of Gross Domestic Product (GDP) all India

level was 7.17 percent as against 7.13 percent of Gross Domestic Product

(GDP) of Food Processing Sector (FPI). In the year 2012-13 share of Food

Processing Sector (FPI) all India level amounted to 1.83 percent, But in the

year 2014-15, share of Food Processing Sector (FPI) all India level was 1.63

percent.

Table No: 2.9

Industry-wise Number of Registered Food Processing Units in India
(No. of units)
Meat, Fish,
Fruits, Grain Other
Dairy Total
Year Vegetables, Mill Food Beverages
Products Units
Oils and Products Products
Animal feed
2002-03 3284 769 12856 5899 1008 23816
2003-04 3352 912 12741 5757 1078 23840
2004-05 3484 927 13639 6093 1219 25362
2005-06 3549 1049 13893 6009 1225 25725
2006-07 3459 1015 13880 6245 1160 25759
2007-08 3667 1096 13805 6300 1351 26219
2008-09 3580 1100 14599 6577 1362 27218
2009-10 3697 1112 14673 6681 1316 27479
2010-11 5587 1493 18549 8394 1815 35838
2011-12 6530 1653 18244 8457 1997 36881
2012-13 5897 1695 18854 8649 2080 37175
Source: Directorate of Economics and Statistics 2015-16

In the year 2002-03, total food processing units amounted to 23816 of

which 3284 meat (fruits, vegetables, and oils) and animal feed units, 769 dairy

product units, 12856 grain mill units, 5899 other food products and 1008

beverage units.
 In the year 2003-04, total food processing units amounted to 23840 of

which 3352 meat (fruits, vegetables, and oils) and animal feed units, 912 dairy

product units, 12741 grain mill units, 5757 other food products and 1078

beverage units.

In the year 2004-05, total food processing units amounted to 25362 of

which 3484 meat (fruits, vegetables, and oils) and animal feed units, 927 dairy

product units, 13639 grain mill units, 6093 other food products and 1219

beverage units.

In the year 2005-06, total food processing units amounted to 25725 of

which 3549 meat (fruits, vegetables, and oils) and animal feed units, 1049 dairy

product units, 13893 grain mill units, 6009 other food products and 1225

beverage units.

In the year 2006-07, total food processing units amounted to 25759 of

which 3459 meat (fruits, vegetables, and oils) and animal feed units, 1015 dairy

product units, 13880 grain mill units, 6245 other food products and 1160

beverage units.

In the year 2007-08, total food processing units amounted to 26219 of

which 3667 meat (fruits, vegetables, and oils) and animal feed units, 1096 dairy

product units, 13805 grain mill units, 6300 other food products and 1351

beverage units.
 In the year 2008-09, total food processing units amounted to 27218 of

which 3580 meat (fruits, vegetables, and oils) and animal feed units, 1100 dairy

product units, 14599 grain mill units, 6577 other food products and 1362

beverage units.

In the year 2009-10, total food processing units amounted to 27479 of

which 3697 meat (fruits, vegetables, and oils) and animal feed units, 1112 dairy

product units, 14673 grain mill units, 6681 other food products and 1316

beverage units.

In the year 2010-11, total food processing units amounted to 35838 of

which 5587 meat (fruits, vegetables, and oils) and animal feed units, 1493 dairy

product units, 18549 grain mill units, 8394 other food products and 1815

beverage units.

In the year 2011-12, total food processing units amounted to 36881 of

which 6530 meat (fruits, vegetables, and oils) and animal feed units, 1653 dairy

product units, 18244 grain mill units, 8457 other food products and 1997

beverage units.

In the year 2012-13, total food processing units amounted to 37175 of

which 5897 meat (fruits, vegetables, oils) and animal feed units, 1695 dairy

product units, 18854 grain mill units, 8649 other food products and 2080

beverage units.
 Table No: 2.10
Top 10 Rice Production Countries
( Million in tone)
Year 2013-14 2014-15 2015-16
Production Production Production
Country Units % Units % Units %
China 20,42,85,000.00 33.42 20,36,12,200.00 32.04 20,82,39,610.00 32.82

India 15,26,00,000.00 24.83 15,92,00,000.00 25.05 15,72,00,000.00 24.78

Indonesia 6,90,45,141.00 11.46 7,12,79,709.00 11.28 7,08,46,465.00 11.16
Bangladesh 3,38,89,632.00 5.58 5,15,00,000.00 8.20 5,23,25,620.00 8.24
Vietnam 4,36,61,570.00 7.30 4,40,39,291.00 6.83 4,49,74,206.00 7.09
Thailand 3,78,00,000.00 6.20 3,60,62,600.00 5.76 3,26,20,160.00 5.14
Myanmar 3,30,00,000.00 5.47 2,87,67,000.00 4.50 2,64,23,300.00 4.16
Philippines 1,80,32,422.00 2.20 1,84,39,406.00 2.80 1,89,67,826.00 2.99
Brazil 1,15,49,881.00 1.81 1,17,82,549.00 1.85 1,21,75,602.00 1.96
Japan 1,06,54,000.00 1.73 1,07,58,000.00 1.69 1,05,49,000.00 1.66
Total 61,45,17,646.00 100 63,54,40,755.00 100 63,43,21,789.00 100
Source: Food & Agricultural Organisation (FAO)

Chart No: 2.2

Top 10 Rice Production Countries

35.00 32.82

30.00
24.78
25.00

20.00

15.00
11.16
10.00 8.24
7.09
5.14 4.16
5.00 2.99 1.96 1.66
0.00
 The table number 2.10 revealed China is the major rice production

(32.82%) country which produces 20,82,39,610 million tonnes in the year

2014-15 as against 20,36,12,200 million tonnes (32.04) in the year 2013-14

followed by India in the second place (24.78%) which produces 15,72,00,000

million tonnes in the year 2014-15, as against 15,92,00,000 million tonnes

(25.05) in the 2013-14.On the whole 63,43,21,789 million tone rice was

produced in the year 2014-15 which was less than the previous year amounted

to 635440733 million tonnes.

Table No: 2.11

India’s Top 10 Rice Production States
(Million Tonnes)

Year 2013-14 2014-15 2015-16

Production Production Production
States Units % Units % Units %
West
15,020.00 18.30 15,310.00 18.14 14,680.00 17.99
Bengal
Uttar
14,420.00 17.28 14,630.00 17.36 12,170.00 14.92
Pradesh
Punjab 11,370.00 13.70 11,270.00 13.35 11,110.00 13.62
Orissa 7,300.00 8.80 7,580.00 8.98 8,300.00 10.17
Andhra
11,510.00 13.95 13,030.00 15.44 7,230.00 8.86
Pradesh
Bihar 7,530.00 9.11 5,510.00 6.53 6,360.00 7.79
Chattisgarh 6,610.00 7.88 6,720.00 7.96 6,320.00 7.79
Tamil Nadu 4,050.00 4.80 5,540.00 6.56 5,730.00 7.02
Assam 5,130.00 6.18 4,780.00 5.68 5,220.00 6.40
Telangana 0.00 0.00 0.00 0.00 4,440.00 5.44
Total 82,940.00 100 84,370.00 100 81,560.00 100
Source: Food & Agricultural Organisation (FAO)
 Chart No: 2.3

India’s Top 10 Rice Production States

20 17.99
18
16 14.92
13.62
14
12 10.17
10 8.86
7.79 7.79 7.02
8 6.4
5.44
6
4
2
0

2015-2016 Production

The table number 2.11 exposed West Bengal is the major rice

production (17.99%) state in which produces 14,680 million tonnes in the year

2013-14 as against 15310 million tonnes (18.14%) in the year 2013-14,

followed by rice production Uttar Pradesh with 12,170 million tonnes (14.92%)

in the year 2013-14, Tamil Nadu placed in eighth rank in the rice production

with 5730 million tonnes (7.02%) in the year 2014-15 as against 5540 million

tonnes (6.56S%) in the year 2013-14. On the whole, 81560 million tonne rice

was produced in the year 2014-15 which was less than the previous year

amounted to 84370 million tonnes.

Rice is also an important cereal food crops in South East Asia. Thailand,

Vietnam, Myanmar, China and Japan are the important countries besides India

growing rice. India ranks first in the export of rice in the world followed by

Vietnam and Thailand. However, India is the largest rice exporter in the world

during 2012 -13(Ramakrishna, 2016).

 Table No: 2.12
Export Details of Basmati Rice from India
(Qty MT, Value in US$)
Importing 2015-16 2016-17
Countries Quantity US$ Quantity US$
Saudi Arab 948847.51 842215136.00 1618685.44 1346666296.00
Iran 695310.31 571188550.00 1433164.37 1131850070.00
Arab Emirates 612154.81 475181693.00 1229313.96 937402650.00
Iraq 419284.04 341581293.00 907481.88 675449780.00
Kuwait 180731.80 211678095.00 325351.04 299417344.00
Total 2856328.47 2441844767.00 5513996.69 4390786140.00
Others 1189493.82 1036136198.00 2456394.51 2042391752.00
Total 4045822.29 3477980965.00 7970391.20 6433177892.00
Share of Top 5 70.60 70.21 69.18 68.25
Source: DGCIS

Chart No: 2.4

Export of Basmati Rice from India

1000000 948847.51
900000
800000
695310.31
700000
612154.81
600000
500000 419284.04
400000
300000
180731.8
200000
100000
0
Saudi Arab Iran Arab Emirates Iraq Kuwait

The table number 2.12 explains, India mostly export basmati rice to

Saudi Arabia, Iran, Arab Emirates, Iraq and Kuwait which amounted to

5513996.69 million tones with the value of US$ 4390786140.00 amounted 68

to 73 percent of the store of rice export constitutes there five countries. Total

export of Basmati rice in 2016-17 valued 7970391.20 million tones with

US$64 bn.
 Table No: 2.13
Export Details of Non-Basmati Rice from India
(Qty in MT, Value in US$)
2015-16 2016-17
Importing
Countries Quantity US$ Quantity US$

Benin 623348.20 215525841.00 1404363.30 505297418.00

Nepal 534139.00 193521897.00 1167467.51 420936666.00
Senegal 913982.00 245795544.00 1352120.40 380640536.00
Guinea 395978.84 133029596.00 1083147.50 366293252.00
Iraq 53840.32 26581347.00 611342.00 281183920.00
Top 5 Total 2521288.36 814454225.00 5618440.71 1954351792.00
Other Countries 3943281.41 1554183929.00 7923167.85 3108595296.00
Total 6464569.77 2368638154.00 13541608.56 5062947088.00
Share of Top 5
39.00 34.38 41.49 38.60
Countries
Source: DGCIS

Chart No: 2.5

Export of Non-Basmati Rice from India

1000000 913982

800000
623348.2
600000 534139
395978.84
400000

200000
53840.32
0
Benin Nepal Senegal Guinea Iraq

The table number 2.13 described, India mostly export Non-Basmati rice

to Benin, Nepal, Senegal, guinea and Iraq which amounted to 5618440.71

million tons (41.49%) with the value of US$1954351790.00 Amounted 25 to

40 percent of the store of rice export constitutes there five countries. Total

export of non-basmati rice in the year 2016-17 amounted to 13541608.56

million tons (41.49%) with US$5062947088.00.

 The present chapter discussed the agro based industries in India which

includes overview of agro based industries, The Agro-processing industry can

be classified based on raw material or final product, Growth of Major Agro

Based Industries in India, Fixed capital of Agro Based Industries in India,

Working capital of Agro Based Industries in India, India’s Export of

Agricultural Principal Commodities, Foreign Direct Investment, Foreign Direct

Investment to the food processing sector, State-wise estimated Number of

Factories in Food Processing Sector in India, Contribution of Food Processing

Industries to Gross Domestic Product , Industry-wise Number of Registered

Food Processing Units, Top (10) Rice Production Countries, India’s Top 10

Rice Production States, Export Details of Basmati Rice from India, Export

Details of Non-Basmati Rice from India it is concluded that agro based

industries is one of the major sector in the economy which help to supply of

raw materials to various industries provides employment generation, utilization

of local resources and flow of income from the rural economy.